A major European investment bank has claimed that London house prices are slowing down, with potential for falls in future, as slowing global growth and a strengthening pound makes it more expensive for foreign buyers to purchase property in the capital.

"Survey and anecdotal evidence point to the steam being taken out of the London market," said Deutsche Bank economist George Buckley.

House prices in the capital have risen by 63pc against the post-crisis low they hit in 2009, compared to 17pc for the rest of the country.

However, the bank said, a number of factors could lead to the market slowing in the coming months.

Deutsche said a slowing of global growth is likely to dampen demand among foreign investors, especially in China and Russia, and that the pound's strength in recent months "would have the effect of making UK property look less attractive to potential international investors".

Deutsche Bank

The bank added that the withdrawal of stimulus measures from central banks could reduce house price inflation, and that a perceived lower level of risk in the eurozone could also reduce investors looking for safe havens.

However, it added that continued population growth, and a supply shortage will put upward pressure on housing.

"There seem to be more downside than upside risks to London housing going forward," Deutsche Bank said.

"As such, while we do not expect a crash in London property prices we do expect price pressures to ease going forward and would not be surprised to see outright falls in asking prices."

The bank said prices in the regions should continue to rise, as high prices spill out from London, and because there is less exposure to foreign buyers.

"With valuations in the regions far less stressed relative to earnings and price moves lagging those of the capital, we would not be surprised to see further gains in the very near-term thanks to spillover effects from London," Deutsche Bank said.